Investors See Hope in Big Corporate Profits

Running the numbers

We are almost at the halfway point for earnings season, and jittery investors are looking to corporate financial reports for direction after inflation, geopolitics and other worries dragged down markets last month. It’s been a different story in the past few days, though, as robust earnings reports steadied nerves.

Futures suggest that stocks will rise for the fourth day in a row, as the headlines from big companies opening their books for investors were mostly positive:

Alphabet said its fourth-quarter profits jumped 36 percent, to $20.6 billion. Its shares are up 10 percent in premarket trading, a move worth nearly $200 billion in market cap.

Exxon Mobil earned $8.9 billion in the fourth quarter, a sharp reversal from its $20 billion loss a year ago, propelled by higher energy prices. Its shares gained 6 percent yesterday after the report.

G.M. reported a sharp drop in fourth-quarter profit, but a 55 percent jump in annual earnings for 2021, to a record $10 billion. Its shares are up 2 percent in premarket trading.

Starbucks said quarterly profit jumped 31 percent at the end of last year, to $816 million. Its shares are down nearly 3 percent in premarket trading, as warnings about supply-chain pressures weigh on the company.

UPS reported $3.1 billion in fourth-quarter profit, surpassing analyst expectations, and recorded operating margins bigger than it has achieved in years. Its shares soared 14 percent yesterday after the report, to a record high.

• What’s news: The shipping giant raised its dividend by nearly 50 percent, its biggest increase since going public, and said it would hit revenue and margin targets a year earlier than expected.

Earnings for S&P 500 companies are on track for a fourth consecutive quarter of growth above 20 percent, according to FactSet. This is expected to slow to single-digit percentages in the quarters ahead, but analysts also expect companies to gradually expand their margins, squeezing more profit from each dollar generated in revenue.

Ever the optimists, analysts tracked by FactSet expect the S&P 500 index to rise about 17 percent from its current level by the end of the year. Noteworthy companies reporting earnings next include Meta later today and Amazon tomorrow. Both of their stocks are trading higher premarket.

HERE’S WHAT’S HAPPENING

Job openings climb despite the Omicron surge. Employers posted 10.9 million open jobs in December, near July’s record. That equaled about 1.7 job openings for every unemployed worker, the highest level since the U.S. began keeping track.